Stocks surge, driven by increased buying activity

Dhaka Stock Exchange (DSE), the country’s prime bourse, surged on Monday, driven by increased buying activity across the trading floor, followed by heightened optimism.

The market turnover exceeded the Tk 1,600 crore mark for the first time in 16 months, reaching Tk 1,654 crore and rising by 4.7 per cent compared to Tk 1,580 crore in the preceding session. Previously, the highest turnover in DSE was Tk 1,811 crore, recorded on September 25, 2022.

DSEX, the key index, gained 41.86 points and closed at 6,322.60. The blue-chip index DS30 and the Shariah-based index DSES closed at 2,133.25 and 1,376.64 points, respectively. Most of the large-cap sectors posted positive performance on the day.

Dhaka stocks surged, driven by increased buying activity across the trading floor, followed by heightened optimism as investors perceived attractive opportunities in the market following recent corrections, EBL Securities said in its daily market review.

The indices stayed upbeat, with opportunistic investors pouring new funds into sector-specific issues, driven by positive expectations related to ongoing corporate earnings disclosures.

Furthermore, the substantial price appreciation on specific large-cap issues played a significant role in extending the upward trend of the core index for consecutive sessions, the review noted.

Out of the 393 issues traded, 260 advanced, 92 declined, and 41 remained unchanged at the Dhaka bourse.

NBFI booked the highest gain of 4.24 per cent. Block trades contributed 2.1 per cent of the overall market turnover. Orion Infusion Ltd was the most traded share with a turnover of Tk 77.4 crore.

Meanwhile, the Chittagong Stock Exchange (CSE) also settled on green terrain. The selected indices (CSCX) and All Share Price Index (CASPI) surged by 111.5 and 187.4 points, respectively.

The DSE on Monday crossed Tk 1,600 crore for the first time after the removal of the floor price on most of the listed companies.

On January 18, after the session’s closing bell, the Bangladesh Securities and Exchange Commission (BSEC) issued an order rescinding the floor price for all listed companies and mutual funds, except for 35 companies’ shares, complying with a long-standing demand from stakeholders.

On January 21, the DSEX fell 96.50 points, or 1.52 per cent, in the first trading session after the floor price withdrawal. After five minutes of trading, the key index had plunged about 214 points but later recovered most of the initial losses.

The next day, DSEX gained 14.05 points and closed at 6,254.31. The stock market regulator also withdrew the floor price for 23 more companies that day.

Now only 12 companies share the floor price. These are Anwar Galvanizing, British American Tobacco, Beximco Ltd, BSRM Ltd, Grameenphone, Islami Bank, Khulna Power, Meghna Petroleum, Orion Pharma, Renata, Robi Axiata, and Shahjibazar Power.

Market insiders said the key index was very much expected to fall as a large number of stocks failed to see price discovery for a long time due to the floor price.

They also said many investors did not get the opportunity to trade due to the prolonged price level. As a result, there was pressure to sell shares at the beginning of the day, but it gradually decreased.

Welcoming the floor withdrawal move, a leading stock broker said the market might see some corrections in the first few days. It is nothing to be afraid of, and the market will recover very soon.

On July 28, 2022, the BSEC imposed floor prices on all securities to prevent shares from falling beyond a certain level amid domestic and global macroeconomic strains.

The share prices of most companies have been stuck at their floor prices for an extended period, pushing investors towards liquidating their holdings and creating a liquidity crisis in the market.